Bill Gates Foundation’s Investments Questioned In Street Protest

As activist investment tactics used by aggressive hedge fund managers comes into focus, social movements mimic their tactics — or perhaps vice versa. The investment portfolio of Bill Gates is being questioned by social activists, as a protest erupted outside their investment meeting that comes on the heels of a hunger strike.

Investment in GEO Group which manages for profit prisons at center of dispute

The Gates foundation investment arm, Bill & Melinda Gates Foundation Asset Trust, was recently the subject of a protest march over a small investment in GEO Group, “the world’s leading provider of correctional” services. Protesters charge GEO Group, which operates for profit prisons that detain illegal immigrants, maltreats its detainees and has engaged in lobbying for increased prison time as a method to boost revenue, a charge the company denies. Detainees accused of illegal immigration violations, some of whom have been imprisoned for more than two years on non-criminal charges, went on a hunger strike to spotlight their plight. In Washington State where GEO Group operates the Northwest Detention Center, 750 of 1,300 inmates refused food and garnered national attention. The GEO Group is accused of doling out harsh punishment for leaders of the non-violent protest, a charge the company denies. “Our company has a long-standing record in the delivery of high quality services under public-private partnerships with Federal and State government agencies dating back to the 1980s,” GEO Group spokesperson Pablo Paez said in an e-mail to ValueWalk.

Lobbying for “beneficial” immigration policy

The Geo Group, Inc. (NYSE:GEO) is accused of not only mistreating and profiting from increased prison time doled out to illegal immigrants; they also stand accused of lobbying on immigration issues to improve their sales revenue – increasing prison time. The longer GEO Group holds prisoners the more revenue their firm generates, yet the GEO Group strongly denies lobbying on behalf of immigration policy, saying: “As a matter of long-standing policy, our company does not advocate for or take a position on any specific immigration or detention policy.”

This statement stands in contrast lobbying documents that reveal Geo Group had in the past hired lobbyists and engaged in efforts to influence immigration policy, as disclosed in publications such as The Nation.

GEO’s federal lobbying disclosure reports are unconscionably vague, notes Jamie Trinkle, a campaign coordinator on the Private Prison Divestment Campaign at advocacy group Enlace. “But we can look to the risk factors that they do report on to their shareholders in more detail for a better idea of where they spend their hundreds of thousands on lobbying and campaign contributions each year.” In their 2012 filing with the Securities and Exchange Commission, GEO noted that “decriminalization of drugs…reductions in crime rates…immigration reform laws…could materially adversely impact us.” Some of the lobbying GEO Group engages in appears as though it is of the revolving door variety. David Venturella, the former head of the ICE Secure Communities program, a program which created a huge new market of immigrant detainees for GEO and its competitor Corrections Corp Of America, is now an executive at GEO Group. The GEO Group has focused its lobbying efforts on ICE and DHS.

A hot potato

Regardless of the finer details of the debate over GEO Group’s lobbying and detainee treatment issues, the fact is they are a politically radioactive investment. Many state public employee retirement systems are directly invested in GEO and Corrections Corp Of America (NYSE:CXW), including CALSTRS, the retirement fund for California teachers. The United Methodist Church divested fully from CCA and GEO in 2012 when they learned that they were invested in private prisons–their progressive divestment resolution also prohibited future investments in any company that derives more than 10% of their revenue from the management and operation of prison facilities.

With this background, questions remain as to why Gates Foundation would invest in such an organization?

“It is morally wrong to invest in private prisons that lobby for harsher prison sentences as a method to boost sales,” said Arturo Carmona, executive director of Presente.org, the largest online Latino advocacy group. “It’s contradictory of the Gates Foundation to advocate for better ‘education’ for Latinos when its investments are devastating our communities.”

Street protests in front of investment committee meeting

Carmona led a group of protesters in a street demonstration in front of Gates Foundation in Seattle where nearly 20 Latino organizations were represented in the protest, some of whom have received grants from the Gates Foundation. “It seems like Gates integrity would be worth more than the measly $2 million invested in GEO Group,” said advocate Maria Rodriguez. “As a leader who tweets about poverty to 15 million followers, having Gates divest would make a big difference to curbing the prison industry appetite for growth.”

Protesters “unsatisfied” after meeting

After the street protest by approximately 50 activists in front of the foundation’s Seattle headquarters, Gates Foundation representatives met with protester representatives. The results of the meeting were “unsatisfying” according to Carmona, who said he plans to keep up the activist pressure.

Author: Mark MelinMark Melin is an alternative investment practitioner whose specialty is recognizing a trading program’s strategy and mapping it to a market environment and performance driver. He provides analysis of managed futures investment performance and commentary regarding related managed futures market environment. A portfolio and industry consultant, he was an adjunct instructor in managed futures at Northwestern University / Chicago and has written or edited three books, including High Performance Managed Futures (Wiley 2010) and The Chicago Board of Trade’s Handbook of Futures and Options (McGraw-Hill 2008). Mark was director of the managed futures division at Alaron Trading until they were acquired by Peregrine Financial Group in 2009, where he was a registered associated person (National Futures Association NFA ID#: 0348336). Mark has also worked as a Commodity Trading Advisor himself, trading a short volatility options portfolio across the yield curve, and was an independent consultant to various broker dealers and futures exchanges, including OneChicago, the single stock futures exchange, and the Chicago Board of Trade. He is also Editor, Opalesque Futures Intelligence and Editor, Opalesque Futures Strategies. - Contact: Mmelin(at)valuewalk.com